The SEC settled charges against Winning Kids, Inc. and its founder and CEO, Christian Hainsworth for conducting a fraudulent offering scheme reaching approximately 200 investors nationwide. According to the complaint, the defendants raised approximately $2 million from investors, purportedly for the development and marketing of children's books. The SEC alleged that Winning Kids and Hainsworth defrauded investors by offering and selling unregistered securities through a series of private offerings, which they marketed primarily through radio advertisements. The SEC also charged sales agents Robert Comiskey, Edward Tamimi, and Victor Selenow for their role in the scheme.

According to the SEC's complaint, the defendants misrepresented to investors that the company was already established, expanding nationally, and starting an acceleration phase of extraordinary growth. In reality, Winning Kids generated almost no revenue from the sale of its books or any other products from 2004 through 2008. The complaint also alleges the defendants provided investors with baseless profit projections of 300 percent annual returns at a time when the company was not even actively attempting to commercially sell and distribute the books. The complaint further alleges the defendants failed to disclose that the sales agents were receiving commissions of up to 20 percent for the sale of Winning Kids' shares. Winning Kids and Hainsworth also failed to disclose that Hainsworth was using offering proceeds for personal expenses, according to the complaint.

Without admitting or denying the allegations in the complaint, Winning Kids and Hainsworth have consented to the entry of a final judgment that: (i) permanently enjoins them from committing or aiding and abetting future violations of the above provisions; and (ii) orders them to pay disgorgement of ill-gotten gains, prejudgment interest thereon, and civil penalties, in amounts to be determined by the court upon the Commission's motion.